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August 2016

Re-Shoring

People in the printed circuit and electronic packaging industries often ask me about re-shoring. My response generally is that re-shoring is a myth. It seems that whenever I try to contact someone by email I get an automated response stating, "I am currently in China and will return to my office on......" Many of the facilities and much of the equipment that would be needed to re-shore have been auctioned off or sent to the scrap heap. Those that operated them have moved on to other jobs. Some have gone to work for Chinese companies.  Further, re-shoring intimates bringing back something. However, technology does not stand still. Advances in fabrication processes and equipment require major expenditures to produce today's, and tomorrow's products.

Major firms, such as Apple have announced intentions to establish independent research facilities in China.   Production often follows within the region of successful R&D. 

What seems to be occurring is not re-shoring but new activity to establish new companies, manufacturing operations and produce product - albeit on a very modest level. However, with a sluggish economy, high corporate taxes, and overly burdensome government regulations there are few venture capital sources available for such efforts - especially in the uncertainty promulgated by the current election year. In fact, affordable financing to modernize and upgrade America's smaller PCB enterprises is largely unavailable.

We must also consider the question posed by Andrew Strong an Associate Director of Cambridge Consultants when we think about reconstituting older manufacturing plants for potential re-shoring: "Repair, Replace Or Re-Invent?" I would suggest, assuming that the products to be made have sufficient competitive market longevity, replace with improvements based on recent developments, automation, design changes, new materials, and lean manufacturing principles - assuming sufficient financing is available.

Something to watch !

The DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that makes contractors and subcontractors subject to approval (as well as review and audit) by appropriate DoD officials when identifying a contractor-approved supplier of electronic parts.

Nano Dimension Ltd. announced that its wholly owned subsidiary, Nano Dimension Technologies, has supplied the first DragonFly 2020 system designated for 3D circuitry and PCBs. The system was delivered to a leading defense company in Israel for production evaluation purposes. To date, Nano Dimension has proven its capabilities of printing multilayer electric circuits only in lab conditions. We are tracking this carefully and expect a progress report on its performance at the Executive Forum presented by the IPC's Hall of Fame at IPC APEX in San Diego February 13, 2017.

Cisco Systems says it will lay off 5,500 employees, 7% of its 78,000 workers. as the internet equipment maker scrambles to adapt to technology changes that have reduced demand for its main products. This will most likely soon effect a number of its bare board suppliers in China.
The reason for the reduction in force is that Cisco’s business has been negatively affected by the shift of its corporate customers to remote data centers for their computing needs instead of their own online networks.

…and you think that producing lines and spaces of 50um is difficult?

Germany’s Heidleberg Instruments' µPG system is a micro pattern generator for direct writing DWL) applications and low volume mask making in the IC industry. It can generate feature sizes 500nm (that’s 0.02 mil or 0.5um) on photomasks.  (However, please note MACRO is NOT always easier than MICRO! )

News from Taiwan

NanYa PCB reported July sales of $77.46 million, about the same as June's sales, but up by 7.5% from July 2015.  Losses for the 2nd quarter were reduced to $7.32 million from the $10.2 million loss the previous quarter.

Low order levels for the iPhone during the first half of 2016 are negatively affecting the sales of a number of FPCB suppliers including Zhen Ding and Flexium.

Flexible printed circuit board (FPCB) producer Ichia Technologies had consolidated revenues of $17.2 million for July, up 4.48% for the month but down 13.2% from 2015 on the year to date. In July, sales of integrated chassis components totaled $4 million, while sales of FPCB products reached $13.5 million. Accumulated Y-T-D 2016 revenues were $106 million, down 24.45% from the previous year.

Automotive board supplier Chin-Poon Industrial increased its holdings in Draco PCB Public its Thai subsidiary, from 52.5% to 75%

Compeq Manufacturing had sales of $115 million for July.

PCB maker Apex International has reported net profits of $4.078 million for the second quarter of 2016, up 26.7% on quarter and 65% for the year to date. The company's July revenues were $29.1 million for July, up 33.7% over July 2015.

The value of PCB products produced by Taiwan-based producers in China and Taiwan is expected to increase 8.8% $4.54 billion in the 3rd quarter.

Gaining traction

Fan-out wafer level packaging (FO-WLP) continues to expand market penetration in a wide variety of formats developed by TSMC, Deca Technologies, ASE, STATS ChipPAC, and Fraunhofer.

It's still all about the car

Singapore’s nuTonomy became the first company to put autonomous cabs on the street. U.S. tech giants Uber and Google were expected to follow shortly thereafter.  The initial tests involve a dozen vehicles in a 2.5 square mile zone with an observer on board and a restricted destination list. Can you imagine the number of lasers, radar devices, sensors, circuits, transmitters, and new electronic packages that will be required for vehicles in the very near future?

Convoluted future for electric car batteries

Nissan Motor is reported to be in talks with Panasonic as well as overseas companies including Chinese firms over the possible sale of its 51% interest in Automotive Energy Supply Corporation, which makes lithium-ion batteries for electric vehicles NEC own the balance of the company. Nissan was said to be interested in selling the company because it would be cheaper to buy batteries for its electric vehicles from other makers.

Competition to supply batteries for electric vehicles is heating up due to expectations that a growing number of lower emission cars will be produced in the coming years. Tesla Motors, which currently procures batteries for its electric vehicles from Panasonic, is planning to boost its total vehicle production to 500,000 in 2018 - two years earlier than its original target.

Nissan and Renault SA, under Carlos Ghosn, who heads both companies, have bet more heavily on electric cars than their mainstream competitors. In 2009 the two companies pledged to invest $4.43 billion to build models including the Nissan Leaf compact and as many as 500,000 batteries per year to power them.

Reuters reported in 2014 that Ghosn was preparing to cut battery production by AESC and instead use packs made by LG Chem.

Another example of the expanding trend of distributors providing full services for the shrinking footprints of equipment and chemical producers.

JUKI Automation Systems, a worldwide supplier of SMT placement systems and production solutions, and full service distributor ETEK Europe Ltd. bundle their competences in order to strengthen their local presence in the markets of the United Kingdom and Ireland - and to further expand their common growth potentials. ETEK provides sales, maintenance, repair, and installation services for its principals. It provides customer training at its  the 14.000 square meter Technology Center in Prestwick, Scotland.

Mycronic AB will acquire 75% of Shenzhen Axxon Automation Co., Ltd. (Axxon) for approximately $51 million in cash from its own funds. Mycronic will obtain the balance of the shares over the next 3 years. Axxon develops, manufactures, and sells dispensing equipment for the electronics industry and is a leading supplier to the SMT market in China. China represents approximately 40% percent of the global dispensing market worth several hundred million dollars.

Materials matter

The Strategic Materials Conference (SMC), themed “Scaling Challenges: The Future of Materials and Packaging” will be held at the Computer History Museum in Mountain View, California on September 20–21. This year’s event will focus on emerging materials and packaging technology trends across the entire microelectronics supply chain. Speakers will include Dr. John Hu, director of Advanced Technology, NvidiaIngrid Y. Shi, secretary general, Integrated Circuit Materials Industry Technology Innovative Alliance, China, and Dr. Anton DeVilliers, senior Technologist, Lithography, Tokyo Electron America.

The Silent Complaint

There have been many books written on marketing and niche marketing, sales, new product introduction, product promotion, customer satisfaction, after sales service, building a business.
But there have been fewer written on the silent complaints: No calls, no RFQs, no orders, or re-orders. Just a deafening silence. avoid where vibrant business communications fail to materialize.
Months and years of planning, R&D, and work can go down the tubes due to the inaction or inappropriate action of one employee, often a senior manager of a business unit.
This can often simply be a lack of response to an inquiry. There are a number of appropriate ways to deal with an inquiry. Respond directly by phone or email, refer the matter to another person to handle it – and advise the inquirer of your action, or, even say that you cannot provide the requested information. Whatever you choose to do, DO NOT just ignore it! That is rude and reflects badly upon your company, as well as upon you.
If one wished to be sure that the arrogant message of how unimportant the business prospect may be, repeat the silence when the inquirer follows up on his original unanswered query.

There is another way you can negate the work and accomplishments of your colleagues while lessening chances of success of your company. Make a promise or commitment, e.g., “I am away on a business trip, but will respond next Tuesday.” Then do nothing.
Did you say that I exaggerate? Do you think that this doesn’t happen in the real competitive world? Well, I must tell you that it does. I have personally experienced both of the above examples from the “Head of Operations” of a business unit of an otherwise reputable company.

Maybe this behavior is another unintended consequence of the digital age and the dehumanizing and depersonalization of conducting business.

What do you think?

In any event, my impression of the company in the aforementioned example is now one of unreliability.

Gene H. Weiner, author and publisher of this column, will talk about reshoring challenges and present 6 new items of interest to the electronic packaging supply chain at the September HDPUG (High Density Packaging User Group) meeting in Nashville, Tennessee.